Unhappy investors in the now-bankrupt Point Center Financial Inc. on Thursday demanded that Assemblywoman Diane Harkey resign from office and abandon her candidacy for the state Board of Equalization.

Harkey, R-Dana Point, and her husband, Dan, controlled Point Center Financial Inc., an Aliso Viejo-based company that has been sued by dozens of investors on allegations of investment fraud. The company, which sells investments in trust deeds, filed for bankruptcy in February – a move that indefinitely delayed the litigation brought by the group of investors.

"She is an elected official; she has a sworn obligation to protect the interests of the people of California, and that means protecting everybody," said Jeffery G. Gomberg, a plaintiff on behalf of the estate of his father, who died recently at 93. "And this is what makes me angry and why I feel its wrong that she's in office while this disagreement is going on."

Diane Harkey could not be reached for comment at her office in Sacramento late Thursday afternoon.

But the Harkeys' attorney, Jeffrey Benice said that the allegations against her are "outrageous," "defamatory" and patently untrue. He said Diane Harkey did not own, work for, or have any involvement in the business decisions of Point Center Financial. He said the investors were attempting to attack Diane Harkey to pressure her husband into settling the lawsuit.

Benice tried and failed to get Diane Harkey dismissed from the lawsuit in 2010, arguing that she played no role in Point Center except as an investor. Investor's losses were not the fault of Point Center Financial, but of the great recession, Benice has said.

The approximately 80 investors named as plaintiffs in the civil lawsuit disagree, saying the Harkeys mismanaged their money and lost $43 million of it – some of which may have been siphoned off to support Diane Harkey's political ambitions and the couple's lifestyle.

"Investors have lost 96-cents on the dollar invested yet you and your husband continue to live in a guard gated, ocean front home, drive a Rolls Royce, own a stable of horses and otherwise live an affluent lifestyle paid for by investors," said the letter that 20 investors said Thursday they planned to sign and send to Harkey.

Benice said it was his understanding that the Harkeys bought their home in 2002, and that their Rolls Royce is 8 years old.

The political stakes are high for Diane Harkey, who was elected to the state Assembly in 2006 after earlier serving on the Dana Point City Council. She is in a four-way race with two other Republican legislators for the GOP-leaning Third District seat on the state Board of Equalization in 2014.

On Thursday, investors said Diane Harkey had no business running for the Board of Equalization, which decides tax policy, while her fiduciary judgment is in question.

"You claim to be a financial expert but at the same time you claim you had no idea what was happening with a company that you (were) deriving income from, that your husband owns and now you want a seat on the Board of Equalization that requires some financial sophistication and sense of fairness," the investors' letter said. "Fraud is not financial sophistication and avoiding justice is not fairness."

Plaintiffs Wanda and Robert Wells, of Newport, said they invested almost $2.2 million in Point Center and lost almost all of it. The couple, both of whom are retired, said they were grateful they had not lost all of their savings or their home, as others had.

Wanda Wells said she did not trust Diane Harkey to make decisions involving taxpayer money because the Harkeys derived income from the now-bankrupt Point Center.

State Assemblywoman Diane Harkey, R-Dana Point, addresses the San Clemente Chamber of Commerce's in 2011. FILE: FRED SWEGLES, ORANGE COUNTY REGISTER
Investor Roddy Miranda of Moreno Valley asks a question of speakers Jeff Gomberg of Signal Mountain, TN and Donna Wall of Newport Beach, both of whom lost substantial investments in the Point Center Financial investment scheme, during a press conference at the Embassy Suites in Santa Ana Thursday. KEN STEINHARDT, ORANGE COUNTY REGISTER
Investor, in Point Center Financial, Jeff Gomberg of Signal Mountain, Tennessee answers questions from concerned investors as he and Donna Wall of Newport Beach call for defendant Diane Harkey to resign from the state Assembly at a press conference at the Embassy Suites in Santa Ana Thursday. KEN STEINHARDT, ORANGE COUNTY REGISTER

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